Steelmaking integral to 'island nation' economy

With the future of Australian steelmaking in the news lately as the nation’s two primary steelmakers tighten operations in response to a global glut, the peak body representing the complete local steel supply chain is calling for a structured national approach to enable the full flow-on benefits from engaging with the local industry to be realised.

ASI Chief Executive, Tony Dixon is calling on the Australian Government to take leadership to stake a more sustainable procurement model for major taxpayer funded development works

“State and Federal governments have a clear role to play in establishing procurement policies that both encourage Australia’s industrial productivity whilst honouring the nation’s international obligations to treat all suppliers fairly, but this doesn’t need to be at the cost of a sustainable Australian industrial sector,” he said.

“Everyday demands for service expediency and cost pressures have led in many cases to government procurement decisions being made purely on the basis of lowest upfront cost. This approach ignores economic value creation that is available from the multiplier effects of engaging the local supply chain meaningfully.”

The ASI recommends that the principle of economic neutrality be applied dictating quality-for-quality comparisons, unpacking artificial costs for local supply, basing procurement more on through-life costs and considering potential flow-on benefits for the local economy like value creation, economic growth and enhancement of the nation’s skills base.

“This approach not only allows flow-on benefits to the local economy but also provides the basis for fairer procurement discussions as do project specifications to shared standards.”

Mr Dixon’s comments come in the wake of yesterday’s results announcement by Arrium which operates the country’s largest long product steel mill located at Whyalla which is experiencing tight supply conditions.

“A more holistic approach would also go beyond merely the current availability of goods. If history is any guide, global steel gluts are balanced with years of shortages when the resilience of a local steelmaking capability really comes into its own so development projects don’t risk undue delays which can be readily imposed on an island nation,” he said.

“As such, Australian steelmaking is a strategic industry supported by a broad supply chain mostly comprising SME businesses throughout the country.

“We have been contributing to summits and inquiries for quite some years now on this issue, but given recent events we need to move beyond talk to give this strategic sector a fairer go.”